Zune Marketplace’s Absurd Pricing Scheme

Lately I have been trying to avoid talking about Microsoft. I figured the whole Zune thing had been covered to death and so my input wasn’t really needed. I continued to think this until I read about Microsoft’s “Zune Marketplace”. This iTMS competitor was so badly designed I just had to write something about it. Even though by now I expect Microsoft to be incompetent, this was taking ineptitude and elevating it to an art form. But let me lay out the facts for you lest we get ahead of ourselves.

As we all know, purchasing songs, videos or games from the iTMS only requires a customer to create an account and have a valid credit card. Thus, like most other business transactions, you purchase a good and the price of that good is billed to your credit card. It works the same way at the grocery store, at the gas station or in a restaurant. And for the most part it seems like a pretty good system. Plenty of people have credit cards and they understand the concept of purchasing items with them. So, how, you ask, could Microsoft screw this up? No, first you might ask, what is there to screw up? I mean, the system already works. All you need your customer to do is show up with a credit card? Right?

Wrong!

I suppose Microsoft saw this as a chance to “innovate”. And we all know what happens when they innovate (in the 25 Worst Tech Products of All Time MS has many entries) This was one of those times when Microsoft should have just stolen the iTMS concept lock, stock and barrel. It would have been unimaginative, but at least it would work. Instead, they decided to go with the following scheme:

The 5 Step Plan To Fill Your Zune With Legal Music
1. Create a free Zune account
2. Register a valid credit card
3. Buy “points” from MS
4. Scratch your head as you try to figure out why you need to buy “points” to buy songs. Why can’t you just use standard American currency? Doesn’t Microsoft accept the Dollar anymore?
5. Say “screw it” and go buy an iPod

Adding a completely unnecessary layer of confusion is, in and of itself, a bad thing. But it wouldn’t be Microsoft if they didn’t go that extra mile to rape their customers. You see, when you buy these “points” you can’t buy them as you need them, you have to purchase them in Microsoft defined denominations. In other words, Microsoft just invented a currency and they require you to invest in this currency before they can sell you any music. And just if you were wondering, here are the denominations:

$5 = 400 points
$15 = 1200 points
$25 = 2000 points
$50 = 4000 points

But wait, it gets BETTER! There isn’t a 1 to 1 correspondence between the value of a “point” and the value of a penny. Let me break out some math for you:

So the answer is “no, the MS song isn’t cheaper, it is the same price as Apple’s”. So, that means, to find the actual price of anything on the Zune store you have to multiply it in your head by a ZP (Zune Point) factor of 1.25, and since the general populace isn’t to keen on doing math in their head I can only conclude that this will cause no small bit of confusion. But wait, it gets better.

If you recall $5 is the lowest denomination you can purchase. So if you want to buy one song from the Zune Marketplace you have pay Microsoft $5 up front and let them keep your remaining 321 points (or $4.01, this is beginning to get confusing). Now, the expectation is that you will be back purchasing more songs (and more points) and so you won’t care about your balance. But, what you are in fact doing is giving an interest free loan to Microsoft (because they, of all companies, need the money).

Of course, you could just spend all of your points each time you buy music, but would require you to purchase songs in multiples of 31,600 points (that being the LCM of 79 & 400). That works out to 400 songs for $395. A better plan would be to buy 5 songs for 395 points (or $4.94) and just save your 5 remaining points for some future purchase. In effect, Microsoft has created a store that only accepts gift cards as the valid method of payments. And if you don’t think thats insane then you obviously already have pre-ordered your Zune.

I know what you’re thinking. Why would Microsoft do this? Perhaps to screw customers out of their money by creating a complex, uselessly confusing layer designed to hide the real price of their products? No, of course not. Why, according to Zune.net the reason is:

The Points that you purchase can be easily managed in a special account that you can use on Zune Marketplace and Xbox Live Marketplace.

Well there you go. It isn’t targeted at average consumers it is targeted at these special Marketplace users. So how many of theses users are there? To figure that out we need to know how many Xbox Live users are there. Well, there have been 24 million Xboxes sold and almost 6 million Xbox 360s sold (as of Sept. of this year). So, if every Xbox owner also buys a Zune, and they also decide to use both Marketplace services (or else what’s the point?) then this service will be useful to, at most, 30 million people. That assumes that all of those people who bought Xboxes outside the USA fly over here and buy a Zune (because the Zune is US only baby!) and then use that Zune in America to load up on their music. (presumably they can then fly home and enjoy their music, assuming of course, that they can both read English and enjoy American music, but whatever)

A more realistic figure is Microsoft sells around 2 million Zunes and maybe half of those users also use the Xbox Live Marketplace. So, this horrible system has been put in place (according to Microsoft’s logic) to make life easier for less than 1 million people.

Somehow I would think that even if you flew over from say Europe to the US to “load up” your Zune and then returned to Europe, the DRM would include a “region check” telling you “sorry, your music is invalid outside the US”

You really should do some demographic projections on where the potential 2,000,000 Zune idiots, sorry ‘owners’, live. Then calculate the likelihood of:
A. Them having a friend nearby that they can beam, sorry ‘Zune’ a song to (for three days).
B. How far away from them the nearest potential Zune friend is. How many miles they’d have to travel and how much time this will take and how much in travel expenses this might cost.
And/Or:
C. The likelihood of them having a friend at all - as they’re Xbox people and probably don’t see daylight, or other humans (pizza delivery person aside), all that often.

It’s like the Credit Card Gift Cards! Sure you buy or receive a $50 Visa Gift card. You make a purchase for $49.49, let’s say. Do you hang onto that card for the 51 cents? I doubt it. And there’s no EVEN divide between the points you get and the songs you get, SO what your doing is throwing money out the window if you don’t use it. While this doesn’t sound like alot, again Do the math…

It’s almost like a mini slush fund. You’ll allways have pennys in the account, you get nothing for it but the company controlling it can use that money as an asset and therefore can use it as collatoral for pretty much anything… Didn’t they do this before?

There is reason to the points system, which has been explained way too many times. I fail to see how an Apple site, which is used by Apple enthusiasts, who have to read manuals, and help files to figure out how to do things on an Apple that is beyond cut/paste, etc.

Anyways, rant aside, the points are there b/c you also earn points on the XBox, which also is going to have access to their Music/Video store.

Besides,if MS made their system that simple, Apple enthusiasts would have yelled and screamed bloody murder at Apple for stealing “1-click”.... even though 1-click is just like any other eCommerce site that has been around way before iTunes that lets you save your credit card info on their site.

Having read this article… I wish I could afford to break every Apple product I own out of pure shame of being affiliated with the same product as this site.

Because of time constraints I don’t normally answer comments to my pieces anymore regardless of how amusing or inflamatory they might be. But for you I will make an exception. Now, I am not going to insult you or get into an arguement over your points. Far from it! Actually what I want is for you to explain to me your reasoning. You said, and I quote,

“There is reason to the points system, which has been explained way too many times.”

Now, while I agree that there is indeed a reason, my point is that the reason is a bad one. (at least from the consumers point of view)

So, here is your chance to convince me of your position. Don’t go break all of your Mac stuff and please don’t complain about any “Mac enthusiasts”, just take a breath, calm down and try to answer me these two questions:

1. What benefit does your average consumer get from this system?

2. Does it outweigh the negatives I mentioned?

Towards the end of my above piece I answer these questions before making my final judgement.

Benefit - Xbox live users have easier access to Zune Marketplace

Downside - Users who don’t use BOTH of these services are stuck with a shoddy interface

Conclusion - Its a bad system

Now, if you disagree with me then by all means argue your point. But please don’t reference imaginary websites or state opinions like “well, everybody knows that. . .” and then pretend they are facts. If you know of a website that lists the benefits of the Zune Marketplace then please, post it for all to see.

When I helped create a land-records e-commerce site in the mid-90’s, I did the exact same thing with “points”. The problem then was two-fold: 1. at the time, credit card clearing cost about $1 per transaction, so we wouldn’t make a profit selling $1 items, and 2. you needed a tangible line item to bill for, and “1 database record” didn’t really count. I think both of these problems have been solved, and credit card clearing services are a lot more eCommerce-savvy these days, so Microsoft going back to the 1990’s solution is pretty pathetic.

As for whodisbe, well, Apple actually LICENSED 1-click from Amazon—they didn’t steal it. (Just like they licensed certain elements of the original Mac GUI from Xerox in exchange for Apple stock.)

The whole point of the MS concept is definitely to confuse. A punter will visit the site and think 79 points is cheaper than 99 cents when in reality it is the same. This is the usual microsoft sleight of hand they always try and pull.

I think my comments are about as constructive as your “Microsoft sucks at everything” articles. You want to point out how bad MS sucks, and I want to point out how your articles suck. To the extent such an endeavor serve a purpose, then they are constructive.

Here is why I deem your comments to be unconstructive. After reading what I wrote you should have come to one of two possible conclusions:

1. You agree with me - While this seems unlikely, if you agree with the points of my article then you can’t turn around and say that it is “unhinged bashing of everything Microsoft”.

2. You disagree with me - The more likely scenario, this assumes that you find fault with some, or all, of what I wrote.

Now, if you think I am right then your following comments serve no purpose. Why would you bother to attack me if you in fact agree with me? (unless you are just trying to be a troll)

But if you think I’m wrong your comments are still useless because you fall back on time-honored system of debating on the internat, “its fact because I said its fact”

If you really do think I’m wrong then don’t just sit back and accuse me of spouting “Microsoft sucks at everything”. PROVE ME WRONG.

I backed up my conclusion with numbers and logic and if you would like I can provide links to both the Wall Street Journal and Microsoft’s website that confirms these numbers. I followed that with my analysis of the situation.

If you think I made a mistake then call me on it. Where am I wrong? Did I provide incorrect data? If so then show me where. Did I reach a wrong conclusion? If so tell me what I am missing.

Your words: “You want to point out how bad MS sucks, and I want to point out how your articles suck.” Ok, go for it. How do my articles suck? Do they suck because they insult Microsoft? Do they suck because they reach invalid conclusions? Or do they suck because they don’t agree with your personal views?

If you really want to continue this then feel free to come up with a coherent argument but please, try to come up with something more intelligent than “you suck cause I said you do”.